- 9 -
least 20 hours each week” on that job. (And he must have been
convincing--the Commissioner conceded this issue.)
The credibility of the brothers’ testimony was undermined
even when it touched on other areas. For instance, when asked on
cross-examination whether he knew anything about what an IRS
appeals officer does, Kai Lee responded: “I don’t know any IRS
people.” His brother Ulysses, who had just retired from his
career as an IRS examiner, was sitting at petitioners’ table with
him at the time.
We conclude from all this that the Lee brothers’ claims
about the number of hours they worked are not credible. They are
nothing more than “post-event ballpark guesstimates,” and in
these cases, not really in the ballpark at all. We must find
neither Lee met the test for either year for being considered a
real estate professional. Their real estate losses were passive.
B. Section 6662
The brothers also contest the Commissioner’s determination
to impose an accuracy-related penalty under section 6662. The
Commissioner gives two reasons to support his determination. The
first is negligence. The regulation defines negligence as not
making
a reasonable attempt to comply with the provisions of
the internal revenue laws or to exercise ordinary and
reasonable care in the preparation of a tax return.
“Negligence” also includes any failure by the taxpayer
to keep adequate books and records or to substantiate
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011